Online boom forces freight industry to upgrade fleet
DHL has just doubled the frequency of its wide-bodied freighter connections between Australia and the US from two to four days a week. It has also introduced to its fleet two new Boeing 767-300ERF wide-bodied freighters.
"The first one arrived last night," the senior vice-president of DHL Express Oceania, Gary Edstein, said on Thursday.
Economists say two of the biggest winners from the high exchange rate have been wholesalers and global air-freight companies.
Chris Richardson, from Deloitte Access Economics, says two things have happened in the past two years: the high exchange rate has made it a buyer's market for Australian consumers and the channels by which Australians shop have become more direct.
"We often hear about the losers from the high exchange rate, such as the big retailers, but there are winners too, like the air-freight companies," Mr Richardson said.
"And the wholesale sector is now bigger than the retail sector. Consumers are cutting out the 'bricks and mortar' retailers a lot of the time."
The growth in the volume of consumer goods flying into Australia has forced DHL to replace the two 747s it was using on its US to Australia route with two new 767s.
"It's a massive change for our operation because it adds an extra 50 tonne-capacity to our global network," Mr Edstein said.
Things have changed for the airfreight business since the financial crisis. DHL's competitors, UPS and Fed-Ex Express, have been expanding as shoppers migrate online. Fed-Ex Express has 660 aircraft in its global fleet, making it the largest express transportation company. UPS now has a global fleet of more than 500 aircraft.
A few years ago, DHL was using the belly of commercial aircraft to ship cargo into Australia. Then 12 months ago it started using its own 747s. But the continued growth in volumes in recent years, driven by the surge in online shopping, has resulted in the adding of the 767s, which increased its global fleet to 250 aircraft.
Frequently Asked Questions about this Article…
The article says two main forces are driving the surge: a high Australian dollar that made overseas goods cheaper and a big shift to online shopping. Together these factors have increased the volume of consumer goods being flown into Australia, pushing demand for air-freight capacity higher.
DHL has doubled the frequency of its wide‑bodied freighter connections between Australia and the US from two to four days a week and added two new Boeing 767‑300ERF wide‑bodied freighters to its fleet. The 767s replaced two 747s on the route to meet the higher volumes.
According to DHL’s senior vice‑president Gary Edstein, the change added an extra 50 tonnes of capacity to DHL’s global network. The addition of the 767s also increased DHL’s global fleet to about 250 aircraft, per the article.
The article explains that the industry shifted from relying on the belly space of commercial passenger aircraft to operating dedicated freighters. DHL moved from using belly capacity to its own 747s about a year ago and has now added 767 freighters as online shopping volumes grew.
The story notes that FedEx Express has about 660 aircraft, making it the largest express transportation company, UPS has a global fleet of more than 500 aircraft, and DHL’s global fleet rose to around 250 aircraft after the recent additions.
Economists quoted in the article say losers include some big bricks‑and‑mortar retailers, while winners include wholesalers and global air‑freight companies. The article also notes that the wholesale sector has grown to be bigger than the retail sector as consumers cut out traditional retailers.
The article highlights that rising volumes benefit wholesalers and air‑freight companies, so everyday investors watching sector trends may want to note stronger demand for freight capacity and companies expanding fleets. This is an observation from economists and industry moves reported in the story, not investment advice.
The article says DHL’s competitors UPS and FedEx have been expanding as shoppers migrate online. FedEx Express operates the largest fleet (about 660 aircraft) and UPS has more than 500 aircraft, reflecting industrywide fleet growth to meet ecommerce demand.
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